Activision Blizzard shares skyrocket on acquisition by Microsoft

Yahoo Finance’s Julie Hyman and Brian Sozzi discuss Microsoft’s acquisition of Activision Blizzard, Bobby Kotick remaining CEO of the video game company, and the outlook for gaming publishers.

Video Transcript

- As we approach the opening bell this morning, we have our eyes firmly on this big deal that was announced earlier. $68.7 billion is what Microsoft is planning to pay to acquire Activision Blizzard here. $95 a share. And really obviously, this beefs up Microsoft's gaming franchise, as we heard from our Dan Howley earlier, Brian Sozzi. And bring this a lot of very popular titles into the Microsoft fold.

I was looking at the numbers earlier and it looks like last year, in fiscal 2021, that is, we saw gaming account for about 6% of Microsoft's overall revenue. Obviously, this is going to lift that number.

BRIAN SOZZI: Yeah, you know, you were joking around with me pre-show, Julia, while I was a little quiet. And I was just thinking deeply on this transaction.

A couple of things that, you know, caught my attention. One, this reminds me of a Berkshire Hathaway at the height of the financial crisis making a bet on some of these banks. You know, this is Microsoft, I think, rubber stamping the Activision business model, really at a time of absolute crisis. Before this deal, Activision Blizzard-- shares were down about 30% given all of their cultural problems that the "Wall Street Journal" in large part has been chronicling them, as well as our very own tech editor Dan Howley here. You've seen a lot of key talent exit the company as a result of those concerns.

And then secondarily, this can-- I would say this is not great news for-- for GameStop, the future of GameStop, as it is situated today, with at least thousands of brick and mortar stores. Within the past two weeks, we've seen Take-Two pay $11 billion to buy Zynga, the leader in many respects in mobile gaming. You see Microsoft spending $68.7 billion in an all-cash transaction to improve and bolster and make a big play on the future of mobile gaming. And to be frank here, I don't see GameStop involved in any of these spaces.

- I love that you bring up GameStop in this situation. Of course you would.

BRIAN SOZZI: It all-- it all ties together. It's just a mosaic, Julia. It's just a mosaic.

- It is-- it does seem to be a mosaic. Their shares down by 3% this morning.

Again, as we've been talking, about Phil Spencer of Microsoft is going to oversee this beefed-up division, including overseeing Bobby Kotick who is still going to be leading up Activision Blizzard. And as we have also been talking about, we got a statement from Activision this morning on the latest in that investigation. You were alluding to-- the company says, "through our expanded ethics and compliance function," they've "completed reviews of more than 90% of the reports" they've gotten since July on the various wrongdoing within the company.

They said for those completed reviews, 37 employees have left the company. Another 44%-- or, 44 received written reprimands, formal warnings, or other discipline. So pretty significant number here of folks leaving the company. And that's just the latest round of people who have left the company.

But I think the next line is also key in this statement-- "the assertion that Mr. Kotick blocked the release of this information is simply inaccurate." That is, by the way, something that the "Wall Street Journal" had reported earlier this morning, that he delayed the release of that-- that's the assertion that was made in the piece-- in order to not make the problems at Activision seem larger than they were.

And you have to ask, was that done up in, sort of bound up in, the timing of these deal negotiations? I don't know. But it seems like that that is an overhang that-- that Microsoft is perhaps going to have to address.

BRIAN SOZZI: So I'd be shocked if we're sitting here a year from now and Bobby "Cot-tick--" Kotick is still the CEO of Activision Blizzard. This is one of the big-- this is one-- he has been one of the biggest power brokers in gaming-- he's-- and, really, I would argue, in entertainment the past 15 years. The notion that a bigwig like this is going to report to the gaming head of Microsoft, Phil Spencer, for the rest of his career as a public company-- or, as an executive, is just ridiculous.

You know, it's realistic. He will probably exit at some point within the next year and just retire with his many, many millions of dollars.

- Yeah, that's a great point. And-- and just finally wanted to mention, as well. You were talking about some of the other game makers. And I want to check on those this morning. So Take-Two actually trading higher, by a little more than 3%. And we're watching EA as well. So, you know, there might be ramifications for the GameStops of the world. But I think there's also ramifications--

BRIAN SOZZI: Yeah.

- --obviously, for these competitors, like an Electronic Arts and like a Take-Two.

BRIAN SOZZI: Yeah, there's-- I was talking to a banker about a week ago who covers-- or, who's involved with a lot of these mobile gaming transactions. There're-- there are going to be more-- there's going to be more consolidation in this space within the next six months. And I'm surprised to see Take-Two's shares up here. Because if you are-- if you-- this, I think, validates that perhaps Take-Two didn't, you know, probably offer a lot, or enough, to ultimately complete that Zynga deal. And there might be a bidding war for that asset. Often news like this today from Microsoft.